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Can I Get a 100% or Low Deposit Mortgage in the UK?

 1. The Rise of 100% Mortgages

What Is a 100% Mortgage?

100% mortgage allows you to borrow the entire purchase price of a property without putting down any deposit.  Yes, you read that right—no upfront cash required! These mortgages are particularly appealing to renters who find it challenging to saveup for a hefty deposit.

Skipton’s Game-Changer

Recently, Skipton Building Society made waves by launching the UK’s first 100% no deposit mortgage since 2008 1 . Here’s what you need to know about it:

    • Eligibility: This mortgage is available to first-time buyers who have paid their rent in full (and on time) for at least 12 months.
    • Age Requirement: You need to be 21 years of age or above.
    • Rental History: You must have been renting for at least 12 consecutive months out of the past 18 and be up to date on all rental payments during this
    • Household Bills: Being up to date on household bills (such as council tax and utilities) is essential.
    • No Defaults: You can’t have missed any other repayment commitments over
      the past six months.
    • Not for New-Build Flats: Unfortunately, this mortgage isn’t available for new-
      build flats.

The Catch: Borrowing Limits

While a 100% mortgage sounds enticing, there’s a twist. You can only borrow the equivalent of, or less than, what you pay in rent each month. In other words, if your monthly rent is £1,000, your Skipton 100% mortgage couldn’t cost you more than£1,000 per month either.

2. Low Deposit Mortgages

What Is a Low Deposit Mortgage?

A low deposit mortgage requires a smaller upfront payment compared to traditional mortgages. Typically, these mortgages allow you to put down as little as 5% of the property’s value.

Availability and Considerations
    • Limited Availability: While 100% mortgages are rare, low deposit mortgages are more common. However, they might be restricted to existing customers of the lender or those with a guarantor.
    • Affordability Calculations: Lenders assess your affordability based on income and outgoings. Usually, it’s around four to four and a half times your salary. Low deposit mortgages follow similar rules but allow for a smaller initial
Accord Mortgages launch their £5K deposit mortgage (up to 99% loan to value)
Who’s it for?
    • At least one applicant must be a first time buyer (defined as never having owned a property in the past) and no background properties on the application
    • Applicants with a minimum £5K deposit
    • Applications that achieve the higher credit score required for lending above 95% LTV
How does it work?

Just like any other mortgage, they just let you put in a smaller deposit

What else do you need to know?
    • 5 Year Fixed Rate product
    • Maximum age of 70 at the end of the mortgage term
    • Available for LTVs between 95.01% LTV and 99% LTV
    • Available for house purchases above £100K up to £500K
    • Minimum loan above £95K
    • Maximum loan £495K
    • Maximum Loan To Income Multiple 4.49 x salary
    • Only available for Capital & Interest
    • Available for new house purchase business only
    • Subject to affordability, criteria and credit score

In line with Consumer Duty requirements, Accord’s Fair Value Assessment in regard
to Residential First Time Buyers has been updated.

    • Purchases of flats, new builds and properties in Northern Ireland
    • Not available for applications where any applicant does not have permanent
      right to reside in the UK
    • Not available for Joint Borrower Sole Proprietor, Cascade Score or Boost LTI


3. Making an Informed Choice – Pros and Cons

100% Mortgages:
    • Pros: No deposit required, accessible for renters, opportunity to get on
      the property ladder sooner.
    • Cons: Borrowing limits tied to rent, potential higher monthly payments.
Low Deposit Mortgages:
    • Pros: Easier entry into homeownership, flexibility.
    • Cons: Higher interest rates, limited choice.


4. Conclusion

Whether you’re eyeing a 100% mortgage or considering a low deposit option, weigh the pros and cons carefully. Consult a mortgage advisor, compare deals, and find the best fit for your financial situation. Remember, the path to homeownership is unique for everyone, so choose wisely and embark on your property journey with confidence!

Contact www.cliftonmortgages.com today to see if we can help.

1 https://www.moneysavingexpert.com/news/2023/05/skipton-no-deposit-mortgage-compares/

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.